High Frequency Trader Explains the Business

High frequency trading is a hot topic these days, but the universe of such traders is small, and there's almost no one of consequence who is willing to talk about it. Until now.

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Dave Cummings is the owner and the Chairman of the Board of Tradebot Systems — one of the biggest high frequency traders in the world. On any given day, Tradebot may be 5 to 10 percent of the trading volume. He's also the founder of BATS Trading, the third largest stock exchange in the United States.

The Business of High Frequency Trading

Bob Pisani sits down with Dave Cummings, owner and Chairman of Tradebot Systems, one of the largest high frequency trading firms in the world. On any given day, Tradebot typically accounts for five to 10 percent of total stock volume.

Dave strongly defended high frequency trading and argued that the investor benefited:

"For all the whining and complaining about high frequency trading and all that, the average retail investor gets a really good deal. The market, the bid offer spreads are tighter than they've ever been," he said on CNBC.

"When you push a button, you get a fill almost instantly. Your broker is charging you less than 10 bucks on a lot of trades. You can't lose sight of that outcome. There's a lot of former middlemen in the game that would like to go back to an era where they made a lot of money. I wouldn't be in this business if I didn't think it was a decent business. I mean by tightening the spreads, we've literally saved investors billions of dollars a year, and I think that's a fair thing. There's middlemen that might not like it, but the public should like the structure an awful lot."